India Unlikely to Tax Crude Veg Oil Imports: Mistry.

NEW DELHI: India is likely to continue with tax-free imports of crude vegetable oils despite record purchases and mounting pressure from refiners to curb overseas supplies, a widely respected analyst said on Wednesday.

India, the world's biggest edible oil importer, bought a record 1.06 million tonnes in August, 64 per cent higher than a year ago. Purchases since the beginning of the year in November are up 5 per cent at 7.45 million tonnes.

Alarmed by all-time high imports, leading trade and industry bodies have repeatedly requested that the government levy a tax to discourage imports.

"I do not feel India will impose duty on crude vegetable oil or raise it on refined oil due to (the) rise in food inflation," London-based Dorab Mistry, who heads the trading arm of Godrej International Ltd, said.

Food inflation has been accelerating in recent weeks with government data on Thursday showing the country's food price index rose 15.10 per cent year-on-year in the week ended Sept. 4.

The country allows duty-free imports of crude vegetable oils and imposes a 7.5 per cent tax on the refined variety.

India buys palm oil from Malaysia, Indonesia and small quantities of soyoil from Argentina and Brazil.

Imports of palm oil were at 5.2 million tonnes or 73 per cent of total cooking oil purchased so far in the current 2009/10 oil year. Soyoil accounted for 20 per cent at 1.4 million tonnes.

Mistry said the rise in global prices would also prohibit India from either slapping a levy on crude vegetable oils or raising the levy on refined varieties.

Palm oil has rebounded 19 per cent from an eight-month low on July 7 on speculation that demand will increase from Asia and harvesting in Malaysia and Indonesia will be disrupted in November and December should La Nina cause flooding.

On Tuesday, Malaysia's December palm oil contract dropped 1.3 per cent to close at 2,674 Malaysian ringgit, easing from a five-week high on Monday.

Mistry, whose forecasts are closely watched by traders, is scheduled to address an international conference later this week.

Source : economictimes.indiatimes.com